Investment firm Daventry Group, in letter, calls on Kinaxis to sell itself

By Svea Herbst-Bayliss and Milana Vinn

NEW YORK (Reuters) -Investment firm Daventry Group has urged Kinaxis to put itself up for sale, calling the Canadian software company a high quality asset that many buyers would pay a "healthy premium" to own.

Daventry, which has been an investor in Kinaxis since March 2021, told the board of directors that years of errors have caused the supply chain management software maker to be undervalued but that new owners could repair the damage quickly.

Kinaxis' problems are not related to its products nor the market, Daventry wrote in a letter seen by Reuters, noting that it sells some of the "stickiest software in the world."

Rather the issues are "self-inflicted and execution-related," the letter said laying out how Kinaxis' share price has dropped nearly 20% since the end of 2020 while its rivals, including Manhattan Associates, have seen their share price climb.

"The Board should immediately initiate a sale process and allow another organization, whether a strategic or financial sponsor, that understands how to scale a software business to finally unlock Kinaxis's value and capitalize on its strong competitive positioning," the letter said.

Daventry Group LP, which together with its affiliates, beneficially owns or controls approximately 1.4% of the outstanding stock of Kinaxis Inc.

Kinaxis had met with Daventry on Aug. 28, it said in a statement, adding it was disappointed that the investment firm published its letter rather than privately engaging the company in talks.

The company's board will review the letter from Daventry, it added.

The investment firm is making its recommendation just weeks after the company said long-time CEO John Sicard will leave by year's end. It worries the current board and its chair Bob Courteau may bungle finding Sicard's replacement.

Recent executive turnovers "leave a massive vacuum in leadership at Kinaxis heading into the company's most important selling months of the year, making the immediate initiation of a sale process imperative," the letter said.

(Reporting by Svea Herbst-Bayliss; Additional reporting by Deborah Sophia; Editing by David Gregorio)